Economy | Hospitality

ECB: Faster recovery from Corona low

ECB President Christine Lagarde expects faster recovery in the eurozone.
IMAGO / Xinhua
ECB President Christine Lagarde expects faster recovery in the eurozone.

The economy in the eurozone is likely to recover faster than expected - at least this is the current assessment of the European Central Bank (ECB). Accordingly, the central bank now expects economic growth of 5.0 percent for the current year. This was announced by ECB President Christine Lagarde in Frankfurt. This also gives hope for the hospitality industry.

In June, the monetary watchdogs were still assuming an increase in gross domestic product (GDP) of 4.6 percent. In the coming year, the economy in the currency area of 19 countries is expected to grow by 4.6 percent according to the latest ECB forecast (June forecast: 4.7 %). For 2023, the central bank's experts continue to expect economic output to increase by 2.1 percent. In the Corona crisis year of 2020, GDP in the eurozone slumped by 6.4 percent, the sharpest decline ever.

Rise in inflation

According to the central bank, inflation in the eurozone is likely to be 2.2 percent this year. In June, the central bank had still assumed an increase of 1.9 percent. For 2022, the monetary guardians now expect an annual price increase of 1.7 percent (June forecast: 1.5%), for 2023, the ECB predicts an inflation rate of 1.5 percent (June forecast: 1.4%).

In dealing with comparatively high inflation rates, the ECB, whose primary goal is stable prices, has gained more flexibility: the central bank is now targeting an annual inflation rate of 2 percent for the currency area and is prepared, at least temporarily, to accept a moderate rise above or fall below this mark.

Long lockdown closures

With regard to the hospitality industry, the figures give hope that the developments will also be felt in the sector. After all, the industry had to cope with some of the most cuts due to the pandemic. And after all, trade, transport and hospitality still contributed a full 16.2 percent to Germany's gross domestic product in 2019, according to the Federal Statistical Office.

The hospitality industry was hit particularly hard by the long lockdown closures: in the first half of 2021, sales in the hospitality industry fell by 35.7 percent in nominal terms (-37.9 % in real terms) compared to the same period last year. Lodging sales were down 49.6 percent (-50.2% in real terms), and restaurants were down 29.6 percent (-32.5% in real terms). Compared to the first half of 2019, the decline in sales in the hospitality industry was 60.1 percent (-62.3 % in real terms).This is according to the latest Dehoga figures.

Painful losses in turnover

The data is based on the monthly business survey of the Federal Statistical Office. The industry classification corresponds to the uniform statistical classification of economic activities in the European Communities (NACE). According to this, the loss of turnover from March 2020 to June 2021 compared to the pre-crisis year 2019 in the hotel and restaurant industry amounts to 64.7 billion euros in real terms. From January to June 2021, there were 76.3 million overnight stays in the accommodation sector. This represents a decrease of 34.8 percent compared to the same period last year. The number of overnight stays by residents fell by 31.0 per cent and those by foreigners by 60.1 per cent.

Rising employment and more overnight stays

However, focusing on the last few months, there is an upward trend. For example, in July 2021, the number of overnight stays last rose significantly, as the Federal Statistical Office announced in Wiesbaden on Thursday. At 48.2 million, they were 6.0 percent above the value from the same month last year, but at the same time still 18.0 percent below July 2019. And: after the far-reaching opening steps of recent months, the number of unemployed people in August 2021 has decreased compared to the previous month, namely by 12,000 to 2.578 million people. Notably, Germany's hospitality industry is hiring again.

In its monthly report on the unemployment and training market, the Federal Employment Agency most recently noted,"Employment subject to social security contributions, for which data is only available for June, rose strongly after seasonal adjustment, and the number of people employed exclusively on marginal wages also increased." According to the agency, the strongest increase in absolute terms was in the hospitality industry, which was particularly hard hit by the crisis. The agency counts an increase of 30,000 jobs here. All this is a positive development, even though the shortage of skilled workers is currently even more painful in the hospitality industry.